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Friday, December 7, 2012

An Inconvenient Truth: Today's "Poor" Contribute Far Less

Here are some interesting data and statistics (more and IRS data here):

In the 1950's the top income tax rate was 91% for income over $3.08 million USD and 81% for income over $1.08 million USD.

According to the article: "In 1958, the top 3% of taxpayers earned 14.7% of all adjusted gross income and paid 29.2% of all federal income taxes. In 2010, the top 3% earned 27.2% of adjusted gross income and their share of all federal taxes rose proportionally, to 51%."

Whether we look at the past or today we see that the top earners paid a little less than 1/3 of all US taxes.

More interestingly in 1958 "... according to Internal Revenue Service records, just 236 of the nation's 45.6 million tax filers had any income that was taxed at 81% or higher."

So 236 people out of 45.6 million paid taxes at either of the top two rates, about .0005% of the tax payers.

Then there is this "... approximately 28,600 filers (0.06% of all taxpayers) earned the $93,168 or more needed to face marginal rates as high as 30%. ...  In 2010, 3.9 million taxpayers (2.75% of all taxpayers) were subjected to rates that were 33% or higher."

So over the last five decades as tax rates have decreased the number of "wealthy," at least according to the IRS in that they have to pay 1/3 of their income as taxes, have increased by about 136 times.

So there are more rich people and they still pay in at about the same rate in terms of all taxes paid.

Now let's consider the poor.

In 1958 the bottom two thirds of earners accounted for 41.3% of all adjusted gross income and paid 29% of all federal taxes.

However, by 2010, their share of all adjusted gross income had fallen to 22.5%.

But their share of taxes paid fell to 6.7%.

What accounts for this dramatic difference?

In 1958 the lowest-tier filers making less than $5,000 annually were subject to an effective 20% rax rate.

And finally we see "Today, almost half of all tax filers have no income-tax liability whatsoever and many "taxpayers" actually get a net refund from the government."

So today's "poor" contribute dramatically less to society in terms of income.

In 1958 there were no food stamps, no WIC, no welfare or unemployment as we know it today.  There were far, far fewer in the Social Security and other government systems.

And STILL these "poor" contributed to society.

Their taxes contributed roads (like the interstate system), bridges, tunnels, airports, and all of the modern public infrastructure we still have today.

And the opportunity to move out of the class of "poor" to "rich" increased some 136 times during the intervening decades.

Today the "rich" contribute about as much to society as they have for decades.

And the "poor" contribute far, far less.

So why do today's "poor" contribute less to society?

Clearly they consume a far, far larger portion of societies resources as well - considering the expanse of the programs available to them.

As a nation we have gone into debt in the last decade some $16 trillion USD to help these poor.

Yet they do less, not more.

Isn't "help" supposed to get people going on their own, help them out of a "jam"?

But instead it seems to have had the opposite effect.

Today's "poor" do not contribute to the society.

The "burden" on the rich of paying for the poor has dramatically increase, i.e., the poor, no longer paying for themselves, now must be paid for by others as well.

An interesting question is how is this transition "fair?"

Certainly today's poor, as well as the poor of the past (I grew up poor), had access to things like Interstates, bridges, and so on built by the poor and the rich.

Today these things are paid for only by the rich and still the "poor" use them.

I think that simple facts like this are quite inconvenient in today's "fiscal cliff" debate.

Today there are far, far more members of society contributing far less and, at the same time, taking far more than ever before.

Why do today's poor pale compared to the "poor" of the past?

Because they fail to contribute to anything but today's debt.

In the 1950's the "poor" paid almost one third of all tax revenue.  They lived with perhaps a radio or a small back and white TV.  Most had a car.  Most had a house.  Most had jobs.  Most worked hard.

In my family this usually meant a factory job.

So is this still true today?

In Walmart it is the exception that I see someone like myself paying their own money for their food - most use "ACCESS" cards (food stamps).

Yet they drive big, expensive SUVs and load up on junk food, soda, and snacks.

They are well dressed.

They have cell phones.

The inconvenient truth here is simple.

Today's "poor" simply don't measure up to the "poor" of the past.

Today's poor are "coasting" on the backs of the "poor of the past."

The poor that built the Interstates and bridges.

The rich, on the other hand and according to these statistics, have carried the same burden for the last five decades.  (Yet they do it only with millions more in their ranks.)

The only conclusion you can draw from this IRS data is that its not the rich who are failing to "carry the load" as the current Administration says.

Its today's poor.

They, as a group, have gone from contributing one third of all tax revenue to basically contributing a negative amount.

Why are today's poor less able than those of the past?

They have a better education.

They have better health care.

So those cannot be the reason...

Perhaps its the fact that they don't have to work and pay taxes???

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